Riggio Addresses B&N Annual Meeting

By Calvin Reid
|

Sep 10, 2013

In his first public appearance since he declined to purchase the B&N retail stores, B&N chair and founder Len Riggio responded to questions on B&N strategy in the wake of continuing Nook device losses and on his no-buy decision during the B&N annual shareholder meeting at the company's Union Square store in New York City. Riggio was genial, confident and expansive with individual shareholders though perhaps a bit testy with the institutional shareholders who pressured him repeatedly over the future of the Nook Media division.

While Mitch Klipper, head of B&N Retail, did tell PW that a new, “more flexible” and “more competitive,” B&N.com Web site, revamped with new technology, would launch at the end of April 2014, the meeting did not present any new information on the state of the company. However, Riggio made his first detailed comments since B&N reported a consolidated $87 million first quarter loss in mid-August, addressing repeated questions on dividends and splitting off the unprofitable Nook Media division from the profitable retail and college divisions.

On the question of paying a dividend to shareholders, Riggio said “we’re open to the idea and [the board] is deliberating a number of options,” emphasizing to repeated questions on the topic that, “dividends are on the table.” Indeed this question was brought up by both individual shareholders (some said it would be helpful to shareholders on fixed incomes) as well as institutional shareholders.

Both B&N CFO Allen Lindstrom and B&N and Nook Media CEO Michael Huseby recapped B&N and Nook Media’s quarterly losses—once again blaming “overly optimistic” projections of past Nook holiday sales—and again emphasized that B&N had to grow its content sales and better integrate the retail stores and Nook digital strategy. Riggio noted that “our losses are coming down,” and pointed out that “our biggest competitor has regularly reported losses for the last 10 years.” Huseby emphasized that “we’re not going to cut our way to profitability. Retail and digital work together and we have to stop these declines quickly and grow content sales. If we don’t, we’ll look at alternatives. We’ve got to grow content sales and there will be no sale or split off of B&N and Nook.”

However, at least one institutional shareholder, describing himself as a “happy customer but an unhappy shareholder,” queried Riggio and the B&N board on why they did not sell off the Nook Media unit as many industry observers had expected. Once again, Riggio emphasized that “everything is on the table; we’re looking at all the doors. How we proceed depends on the opportunities we encounter. Some of you tell me you want a dividend, or a special dividend; others say sell one of the companies or others say split up the company. There are a lot of possibilities and not all of them mesh.”

But after repeated questions on both topics—dividends or split the company—including at least one more question on his own no-buy decision, Riggio seemed to have had enough, especially on whether he was going to buy B&N retail. “I’m not obliged to talk about personal decisions,” he said pointedly to one shareholder, who began to retreat from the question once it was clear Riggio was a getting a little hot under the collar. “One side is demanding I buy retail, others stay I’m stealing retail. So I don’t know where you go from there.” Riggio continued, emphasizing, "I love this company and this business so it's not all about money. It’s more personal. I don’t want to buy retail and I don’t have to say why.”

After more questions along the line of “how long before a decision and how much loss is too much,” from shareholders, an affable Gregory Maffei, CEO of Liberty Media, a major shareholder that owns about 17% of B&N, took the stage. “Look, no one is happy with Nook, we know we need a new e-reader strategy but it’s not easy when you look at [the competitors] we’re up against.” Maffei said, “It’s not like Liberty Media is against split-offs but it would be difficult to do at this time.”

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